Really Tuff to Find A Deal In Southern Cali?

Question

Is any one else trying to flip in Southern California, having trouble finding a deal can't seem to find one. I'm making many offers on the mls if i get any action at all its a high counter offer and i cant take the risk to make 10K to 12K i need at least a 20K spread because im using hard money.

Ive been moving towards the auctions and even there it seems like these big company's are paying way to much for these deals. There must be a lot of people holding these properties is all i can think of. My comps are dead on too i make sure to check my mentors and ask them there opinions on my analysis and they say there having trouble picking up deals also.

Whats going on, is the game changing in Cali? Any one else have any opinion on this? Thanks guys.

Jason S. · Answer

Sometimes a deal is made in the knowing of a specific neighborhood better than others.

Sometimes the deal is done before it hits the MLS.

A lot of times the deal is in the relationship you build with the listing agent.

Keep making offers. Are you building rapport with the listing agent? Are the others that get the deals paying more or less than your offer? Are they re-selling at your projected sales price, lower? higher?

Also, 70%ARV deals like your target are difficult off the MLS without some finesse and rapport.

Account Closed · Answer

For starters I suggest doing some reading here and else where on yellow letter marketing campaigns.  I don't use that letter or anything like it, but many swear by it.  It will give you an idea of some ways to present your message (I buy houses).  It really is a numbers game, so you want to have a pretty general message, IMO.

After you have some ideas about your message you'll need a list.  You can buy lists from various data servers.  Or if you have a relationship with a CA title company, they will give you an online account where you can compile lists and/or mailing labels for free.  The title company data bases aren't as specific but are certainly fine to start out with.  And they are the right price.

Read as much as you can about direct marketing here and on other RE sites.  You'll get a feel whether it something you want to do or if you want to find someone else to do it for you.  Happy marketing!

Account Closed · Answer

Chris:  I think I'm pretty good at what I do (working directly with sellers and finding deals) and I can tell you that I would starve if I were looking for deals right now the MLS. For those with cash AND the right skill set AND who are super motivated to network and make the relationships necessary to get first dibs on new listings it probably works best.  I'm missing a few of those necessary ingredients.  :)

There just aren't a lot of straight sales hitting the MLS right now.  The REO volume is low.  It's super competitive for the props with that 20K min. profit that rehabbers are going for in my area.  The trustee's sale buyers I know are doing OK but the margins are thinner and there just isn't enough good stuff to bid on.

Think about looking somewhere other then the MLS for deals.  I know that working directly with sellers isn't for everyone but think about who a motivated seller might be and what you can bring to the table.  You can search this site and others for tons of good ideas about motivated sellers.  Direct marketing is expensive so you definitely want to hone in on what kind of property you are looking for and what kind of seller would suit you best.

All that being said, my marketing in the past 6 months isn't providing the same of kind of returns that it usually has.   For years I had a stellar response rate (5-10%). I'm now at less than 5% on very targeted lists.  I keep track of my leads to see what sells and to whom so I can see where I could have done my offers differently.  What's different is that the bulk of my leads just aren't selling....not to me, not to anyone.  I'm spending a lot of money to find that out.  :)

I suggest you keep looking, keep asking, keep thinking about different ways to work with sellers.

Chris Gawlik · Answer

Thanks for the advice Jason Ill stick with it and keep making offers. I think you may be rite I mite need to build more rapport with the listing agent. My wife has her real estate license but is actually a school teacher so ... Maybe if i let the listing agents double end on the buying side or even the buying and selling side they will be more willing to work and negotiate with there asset managers.

So far I have made all offers in my wife's name to try and save some cash. Any way huge auction day coming Monday so hopefully i can catch a deal on Monday or with in the next week at the courthouse steps. Good luck on your investing every one.

Chris Gawlik · Answer

I have made around 25 offers in the last 2 months on RE owned property that is 15 to 20 dollar under the average price per square foot of the area were I'm trying to pick up the deal. Most of the deals that i have made offers on were 200k and under. Honestly if there were more property's on the MLS that made sense i would have offered on them but in the areas that I know best and am comfortable with the deals have been very slim.

For instance If there is a deal - 3/2 1500 sq ft selling for 120k with a rehab of 15k. Average price per sq ft is 100 dollars for the area. So your looking at 80 cents on the dollar is the current asking price. so ARV is 150k but my offer would have to be 90k for this deal to make sense. Keep in mind I'm using hard money which is usually 5 points plus 12% interest only payments. This same scenario happened around 15 times to me in the last 2 months i would get countered at around 110k and try to re counter wouldn't work.

Even on the deals that stayed on the MLS for around 1 month i would follow them and have the realtors ask asset managers if they would go lower trying to track the deals but didn't work, they were either gone or they still would not budge.

These are my focus areas - Yucaipa, Calimesa, Banning, Beaumont, Hemet, San Jacinto, Moreno Valley, Redlands, Mentone, Loma Linda, Nice Areas of San Bernardino and Highland.

Maybe I'm doing this wrong or the wrong way looking on the MLS. It seem like most of the people hitting the MLS hard have many great realtor contacts and swoop on the deals before they hit the MLS and also no price reduction recorded on the MLS but only then know about the price drop so no competition for them.

I'm just not at this stage yet, I'm trying to get there to be the real estate baller with all the contacts but so far its not working out. I'm not calling it quits either just want to score deal really bad.

Any way thanks for your time and comments every one, any other suggestions about what i can do to hit the MLS harder would be great.

Jason S. · Answer

There are deals.
Whats your ROI target?
Making $20K is not descriptive enough, $20K on $50K or $20K on $100K? or $150K?
Your mentors may also be too conservative, I know I passed around a list of cash homes the other day and no one bit, yet on there was a home for $110K cash that I now have in escrow for $167K financed conventional no concessions - did not touch the house.
There are deals.

What are your numbers?

Chris Gawlik · Answer

Ive been hearing that marketing works from some fellow investors and there is a lot of information about marketing, but i also read its a mixed bag depending on the area that your in.

That was actually going to be my next step in trying to find more deals. I have been doing a lot of net working but that hasn't been paying off lately either. Could you point me in the rite direction in terms of what kind of marketing to start and were would be a good city in southern cali to start this marketing. I live in Yucaipa CA but I invest all over the inland empire and LA county.

Obviously I'm still new or i wouldn't be asking so many questions. I'm really starting to hit the auctions hard to find a deal but don't have to much cash. Im looking in to using hard money for the auction process we'll see how it goes.

Really Tuff to Find A Deal In Southern Cali?

Most Popular Reply